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Tuesday, 30 Jan 2018

Written Answers Nos. 99-110

Personal Contract Plans

Questions (99, 100)

Willie Penrose

Question:

99. Deputy Willie Penrose asked the Minister for Finance the investigations and plans his Department has in respect of the regulation of personal contract plans and ensuring persons have adequate information on the cost of PCPs; and if he will make a statement on the matter. [4300/18]

View answer

Joan Burton

Question:

100. Deputy Joan Burton asked the Minister for Finance the investigations and plans he has in respect of the regulation of personal contract plans, PCPs, and ensuring persons have adequate information on the cost of PCPs; and if he will make a statement on the matter. [4137/18]

View answer

Written answers

I propose to take Questions Nos. 99 and 100 together.

Personal Contract Plans (PCP) are a form of Hire Purchase and both the Central Bank and the Competition and Consumer Protection Commission (CCPC) have certain functions and legal powers in relation to the provision of hire-purchase agreements.

The CCPC is responsible under the Consumer Credit Act 1995, for the authorisation of credit intermediaries, some of whom may sell PCPs to consumers on behalf of a finance company.  I have consulted with the CCPC on this issue and have been informed that the CCPC provides licences to credit intermediaries and keeps an online list of credit intermediaries holding a valid authorisation which is available on the CCPC website www.ccpc.ie.

The CCPC also deals with complaints about the advertising of Credit Agreements, issuing Pawnbrokers licenses and the advertising of car finance on credit intermediary websites and in the media. The CCPC’s remit is limited to authorisation, as opposed to having a regulatory role for PCPs. It also has a specific statutory remit to provide personal finance information and education to assist consumers.

In 2017 the Competition and Consumer Protection Commission undertook the first comprehensive study of the PCP market in the State. The CCPC’s study set out to determine whether the current consumer protection regime is fit for purpose in this market. As part of its study the CCPC issued detailed questionnaires to all the financial institutions that underwrite PCP finance in the State. This allowed the CCPC to compile, for the first time, primary data relating to the number and value of PCP finance contracts issued. The CCPC is currently finalising its report and recommendations. It is expected that the study will be published in February.

Insurance Coverage

Questions (101, 107)

Brian Stanley

Question:

101. Deputy Brian Stanley asked the Minister for Finance the measures he is taking regarding the refusal of some insurance companies to insure vehicles that are over ten years old; if he has been in contact with the insurance industry on this issue; and if he will make a statement on the matter. [4231/18]

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Brian Stanley

Question:

107. Deputy Brian Stanley asked the Minister for Finance his views regarding the practice of some insurance companies refusing to insure vehicles that are over ten years old; and if he will make a statement on the matter. [4230/18]

View answer

Written answers

I propose to take Questions Nos. 101 and 107 together.

As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation.  Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept.  This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products.  Consequently, I am not in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of drivers or vehicles. 

In making their individual decisions on whether to offer cover and what terms to apply, insurers will use a combination of rating factors, which include the age and type of the vehicle, as well as the age of the driver, the relevant claims record and driving experience, the number of drivers, how the car is used, etc.  My understanding is that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market.  In addition, insurance companies will price in accordance with their own past claims experience, meaning that in relation to the age of a vehicle and the availability of cover, different insurance companies will use different age thresholds.

Finally, if a consumer is unable to secure a quotation on the open market, he or she may be in a position to avail of the Declined Cases Agreement (DCA) process.  Under the terms of the DCA, the insurance market will not refuse to provide insurance to an individual seeking insurance if the person has approached at least three insurers and has not been able to obtain cover from them.  In this regard, there are further details available on the Insurance Ireland website while Insurance Ireland also operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to obtaining insurance. The relevant contact details are: feedback@insuranceireland.eu  or declined@insuranceireland.eu or 01-6761914.

Consumer Protection

Questions (102)

Michael McGrath

Question:

102. Deputy Michael McGrath asked the Minister for Finance if he is satisfied with the operation of the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015; his views on whether unregulated loans owners such as private equity funds should be directly regulated; and if he will make a statement on the matter. [4284/18]

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Written answers

The Consumer Protection (Regulation of Credit Servicing Firms) Act 2015 (“the 2015 Act”) was introduced in July 2015 to fill the consumer protection gap where loans are sold by the original lender to an unregulated firm.

The legislation ensures that relevant borrowers whose loans are sold to unregulated third parties maintain the regulatory protections they had prior to the sale. Credit servicing firms must comply with all relevant requirements of financial services legislation, including the regulatory requirements set out in the Central Bank’s statutory Codes of Conduct and Regulations. These requirements include:

- the Consumer Protection Code 2012;

- the Code of Conduct on Mortgage Arrears 2013;

- the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Lending to Small and Small and Medium-Sized Enterprises) Regulations 2015;

- the Minimum Competency Code 2017 and the Minimum Competency Regulations 2017;

- Part V of the Central Bank Act 1997; and

- Fitness and Probity Regulations and Standards issued under Part 3 of the Central Bank Reform Act 2010.

Provision 3.11 of the Central Bank’s Consumer Protection Code 2012 (“the Code”) requires that, where a regulated lender intends to transfer all or part of its ‘regulated activities’ to another regulated entity, it must provide advance notification to both the Central Bank and affected consumers.

Specifically, a lender must provide a consumer with at least 2 months’ notice before transferring all or part of its loan book covered by the Code to another person, including where the transferee is an unregulated entity. Where the transferee is an unregulated entity, the Code requires that the regulated lender also notify the consumer of the regulated entity that will be ‘servicing’ the loan for the unregulated entity.

In the event that there is a change in the credit servicing firm, the existing credit servicing firm must also notify the Central Bank and the consumer in advance, in accordance with the timelines set out under Provision 3.11 of the Code.

The Central Bank published Authorisation Requirements and Standards for Credit Servicing Firms on 10 December 2015. All firms seeking authorisation as a Credit Servicing Firm will be required to demonstrate to the Central Bank that they are in a position to meet each of the Authorisation Requirements and Standards.

Housing Provision

Questions (103)

Pearse Doherty

Question:

103. Deputy Pearse Doherty asked the Minister for Finance the measures he is taking through tax and credit policy to encourage the supply of rather than the demand for housing; and if he will make a statement on the matter. [4311/18]

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Written answers

In view of the housing supply challenge I introduced a Stamp Duty refund scheme in Finance Act 2017 which is intended to stimulate the provision of residential accommodation by providing for a partial refund of stamp duty paid on the acquisition of land where that land is used for the development of housing. The refund scheme has a number of conditions that are designed to ensure that only those builders and developers who provide completed housing units within a reasonable period of time can qualify for a refund of the difference in the amount of stamp duty payable at the rates of 2% and 6%.

Finance Act 2017 also provided for a change to the CGT relief for land and buildings which applied where development land and residential/ commercial property was purchased between 7 December 2011 and end-2014 (the qualifying period) and held for seven years. The change in the law allows individuals retain the right to sell those assets subject to the relief at or after the current seven year limit, but will allow for full CGT relief on any gain to apply if a qualifying asset which was purchased during the qualifying period is sold at any time between the 4th anniversary of its purchase and the 7th anniversary of that purchase. This change could help encourage and promote the sale of assets such as development land and existing residential properties, which qualify for the CGT relief, as there would be no need to wait for the full seven years to elapse in order to enjoy full relief from CGT.

In Budget 2018 I announced a new, time-limited deduction for pre-letting expenses incurred on property that have been vacant for one year or more.  The purpose of this relief is to encourage owners of vacant property to bring that accommodation into the rental system, thereby increasing the overall supply of residential accommodation.

This measure was an option put forward in the report of the Working Group on the Tax and Fiscal Treatment of Rental Accommodation Providers. The report outlines the current situation in the rental accommodation sector, summarises the main issues raised in a public consultation conducted by the working group, and puts forward ten potential policy options for consideration.  The measure introduced in Budget 2018 was prioritised as it was specifically designed to encourage an overall increase in housing supply by bringing currently vacant property back into residential use.

The Help-to-Buy (HTB) initiative introduced in Budget 2017 provides a tax rebate for first-time purchasers to assist them to fund the deposit required to purchase or self-build a new house or apartment to live in as their home. One of the policy aims was to encourage the additional supply of new housing. My Department commissioned Indecon to complete an independent impact assessment of HTB in March 2017. The report was published as part of Budget 2018 and it found that there was some evidence of improvement in the supply of housing in the Irish market since the introduction of HTB. However, as supply inevitably takes time to respond, any identifiable overall impact of HTB on supply is likely to be only seen over time.

As part of the assessment, 55 contractors were surveyed by Indecon. The contractors indicated they had built or commenced building on 3,098 housing units since the measure was introduced and firms in this sample were planning on building 12,752 additional new housing units over the next three years. Most of the contractors suggested that the HTB scheme had encouraged them to commence building new units.

While not constituting a taxation measure, the Deputy will be aware that section 86 of Finance Act 2017 provides for an exploration of the key issues in relation to the potential application of a tax on vacant residential property, to be reported on within 9 months of the passing of the Finance Act. I consider that the objective to be met by such a tax would be to increase the much needed supply of homes for rent or purchase to meet the growing demand. 

The Ireland Strategic Investment Fund (ISIF) is making a very substantial contribution to new private housing supply which is critical in terms of meeting the pent up demand for housing across all sectors of the market. In line with its double bottom line mandate, ISIF has already invested in a number of significant financing platforms and projects in the construction sector, and is actively examining other investment opportunities.

State Aid Investigations

Questions (104, 167)

Joan Burton

Question:

104. Deputy Joan Burton asked the Minister for Finance the position regarding the escrow account for all of the fines levied by the European Commission against a company (details supplied); and if he will make a statement on the matter. [4138/18]

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Alan Kelly

Question:

167. Deputy Alan Kelly asked the Minister for Finance if a company (details supplied) has provided part of or all of the fines levied by the European Commission; and if he will make a statement on the matter. [4310/18]

View answer

Written answers

I propose to take Questions Nos. 104 and 167 together.

I am assuming the Deputy is referring to the alleged State Aid in the Apple Decision.

Ireland has never accepted the Commission’s analysis in the Apple State aid Decision.

However, we have always been clear that the Government is fully committed to ensuring that recovery of the alleged Apple State aid takes place without delay and has committed significant resources to ensuring this is achieved as quickly as possible whilst ensuring that the interests of the Irish taxpayer are adequately protected.  

Significant progress has been made on this complex issue and the establishment of an escrow fund, in compliance with all relevant Irish constitutional and European Union law requirements, is close to completion. Officials and experts from across the State have been engaged in intensive work to ensure that Ireland complies with all its recovery obligations as soon as possible.

Insurance Costs

Questions (105)

Michael McGrath

Question:

105. Deputy Michael McGrath asked the Minister for Finance the status of the second phase of the cost of insurance working group on employer liability and public liability; when the working group will come forward with recommendations; and if he will make a statement on the matter. [4280/18]

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Written answers

The second phase of the Cost of Insurance Working Group under the Chairmanship of the Minister of State for Financial Services and Insurance, Michael D’Arcy TD, recently concluded its report in relation to employer liability and public liability insurance. 

This report was provided to me earlier in January and I endorsed it.  Following the necessary consultations with Government Departments, the Minister of State presented the Cost of Insurance Working Group’s (CIWG’s) Report on the Cost of Employer and Public Liability Insurance to Government on 23 January 2018, and the Government approved the report.  The Report was subsequently published on 25 January. 

The CIWG’s Report makes 15 recommendations with 29 associated actions to be carried out. The recommendations and actions are detailed in an action plan contained in the report with agreed timelines for implementation.  The recommendations, covering three main themes, include actions to:

- Increase Transparency: enhance levels of transparency and improve data sharing and collection processes

- Review the level of damages in personal injury cases: request that the Law Reform Commission undertake a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries and

- Improve the personal injuries litigation framework: through a number of measures, namely:

1. ensuring potential defendants are notified in sufficient time that an incident has occurred in relation to which a claim is going to be made against their policy;

2. tackling fraudulent or exaggerated claims; and

3. ensuring suitable training and information supports are available to the judiciary to assist in the fair and consistent assessment and awarding of damages in personal injury cases.

The Working Group will continue to meet in 2018 and will focus on the ongoing implementation of the 2017 Motor Report and this new Report focusing on Employer and Public Liability insurance.

Tracker Mortgage Examination

Questions (106)

Joan Burton

Question:

106. Deputy Joan Burton asked the Minister for Finance the actions his Department plans to take on foot of the significant protected disclosures by bank staff to the Central Bank regarding the tracker mortgage scandal; and if he will make a statement on the matter. [4134/18]

View answer

Written answers

The Central Bank is a prescribed person for a worker to make a disclosure under the Protected Disclosures Act, 2014 (the 2014 Act) which they believe is substantially true, and receives protected disclosures from persons who, in good faith make a disclosure under the Central Bank (Supervision and Enforcement) Act, 2013 (the 2013 Act), to the Central Bank or to one of its employees or one of its authorised officers; and they have reasonable grounds for believing that the disclosure will show that there has been, is being or is likely to be a breach of, or an offence under, financial services legislation or the concealment or destruction of evidence relating to such an offence or breach.

Senior persons in regulated firms are required (pursuant to Section 38 (2) of the 2013 Act) to report suspected breaches of financial services legislation which they consider may be of material assistance to the Central Bank. 

A key protection in both pieces of legislation is that the identity of the reporting person is kept confidential. Except for specific, prescribed circumstances, the Central Bank cannot disclose the identity of the reporting person or any information which may by implication identify them. This protection is often of critical importance to those making such reports. The Central Bank takes this confidentiality obligation with the utmost seriousness. Any compromise of this obligation might discourage people from making disclosures to the Central Bank, all the more so if they are employees raising concerns about their own employers. 

The Central Bank does not share details of the nature of any protected disclosures it receives, whether relating to tracker mortgage issues or other issues, which might potentially identify reporting persons.

The Central Bank welcomes approaches from anyone with information that can help the Central Bank carry out its mission of safeguarding stability and protecting consumers. The Central Bank has a dedicated unit, the Protected Disclosures Desk, to receive protected disclosure/whistle-blowing reports regarding alleged breaches of financial services legislation from members of the public including employees working in regulated firms. The Protected Disclosures Desk is the primary point of contact for people to make reports. It also provides information regarding the process for making reports and how the Central Bank assesses the reports.  There is a dedicated section on the Central Bank’s website with further information on protected disclosures: https://www.centralbank.ie/regulation/protected-disclosures-whistleblowing.

The Central Bank considers protected disclosures as a valuable tool to assist in its supervision of regulated firms and individuals in those firms. A subject matter expert in the relevant supervisory division considers each protected disclosure and examines the allegations thoroughly.

The Central Bank publishes details on the work of the Protected Disclosures Desk in the Central Bank’s Annual Reports as well as an Annual Protected Disclosure Report setting out the number of reports received during the relevant reporting period and action taken. The Central Bank of Ireland received 44 protected disclosures from July 2015 to June 2016 and 79 from July 2016 to June 2017. All disclosures received were thoroughly assessed and, where required, appropriate action was taken.

The Central Bank encourages any person/employee who may have information in relation to suspected breaches of financial services legislation to come forward and my Department supports the Central Bank in carrying out its statutory functions in relation to protected disclosures.

Question No. 107 answered with Question No. 101.
Question No. 108 answered with Question No. 82.

Corporation Tax Regime

Questions (109, 176, 177)

Bernard Durkan

Question:

109. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that Ireland's 12.5% corporation profits tax remains intact in view of its importance to the economy particularly post Brexit and the difficulty posed by being an island off the coast of Europe with consequent extra cost in getting to the centre of the market; and if he will make a statement on the matter. [4303/18]

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Bernard Durkan

Question:

176. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects Ireland's 12.5 % corporation profits tax to remain in place, notwithstanding efforts to bring about its cessation. [4637/18]

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Bernard Durkan

Question:

177. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects to retain incentives to encourage foreign direct investment in the future; and if he will make a statement on the matter. [4638/18]

View answer

Written answers

I propose to take Questions Nos. 109, 176 and 177 together.

Ireland’s corporation tax regime is a core part of our economic policy mix and is a longstanding anchor of our offering on foreign direct investment (‘FDI’).

At 12.5%, Ireland has one of the most competitive headline corporate tax rates in the OECD. This rate is applied to a broad base – a policy which is endorsed by the likes of the OECD as it is good for growth in our economy.

Our competitive corporation tax regime has been an important part of our industrial policy since the 1950s, and has attracted real and substantive operations to Ireland since then.  We only have and want real substantive FDI, the kind that brings real jobs and investment into Ireland. 

In 2014 the Department of Finance published the Economic Impact Assessment of Ireland’s Corporation Tax Policy.  This contained the results of extensive research which was carried out and commissioned by the Department of Finance which sought to quantify the effect of corporation tax policy on the Irish economy.

 As part of this project, an independent organisation (the Economic and Social Research Institute (‘ESRI’)) was commissioned to carry out a study into the impact that the corporation tax rate has on the decision of firms to invest in Ireland.  This independent research found if the rate had been higher over the period of their sample then the number of new foreign investments into Ireland would have been lower.

The maintenance of the standard 12.5% rate of corporation tax is therefore extremely important for Ireland’s economy.  Ireland, like other smaller member states, is geographically and historically a peripheral country in Europe.  A competitive corporate tax rate is a tool to address the economic limitations that come with being a peripheral country, as compared to larger core countries.  Ireland’s 12.5% corporation tax rate plays an important role in attracting FDI to Ireland and thereby increasing employment here.

This evidence underpins the Irish Government’s continued commitment to the 12.5% rate.

Corporation Tax Regime

Questions (110)

Thomas P. Broughan

Question:

110. Deputy Thomas P. Broughan asked the Minister for Finance his views on the latest proposals by the EU on taxation of the digital industries within the European Union and its impact on corporation tax receipts here in the future; and if he will make a statement on the matter. [3995/18]

View answer

Written answers

The European Commission is expected to announce proposed Directives on digital taxation before the end of March this year.  It is expected that the proposals will include short term and long term suggestions for how digital companies should be taxed within the EU.  

When these proposals are published, they will then be debated in detail by Member States.  It is likely that the proposals will be amended as the debate on them progresses.  Ultimately unanimity between all Member States will be needed if any proposal is to be agreed and there is no guarantee that anything will ultimately be agreed.  I have been clear in my view that if action is to be taken in this area, its needs to be agreed at global level, needs to focus on ensuring tax is paid where value is created and must not simply represent a redistribution of tax to large Member States with bigger populations and markets. 

Ireland will constructively engage with the proposals, while assessing whether they are in our long term interests.  Given that we have not seen the detail of any proposals, it is not possible at this time to analyse the potential impact of the eventual proposals on corporation tax receipts in Ireland.

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